I'm in a similar position with all my old models I had when I was about 12 and picked up out of the attic a couple months ago.
I salvaged all the metal marines, and then sorted out which arms/weapons I could also salvage (not a lot of them unfortunately) and paint stripped them (well, am still in the process of doing so) and then figured roughly what direction I wanted to take the army.
I went for simple and expandable over a specific build, so my goal was to get 2 squads of grey hunters (they are all space wolves, so I kept them as space wolves) and a squad of long fangs (as I did a bit of research and found out missiles launchers are good, and I had 3 ultramarine missile launcher dudes so wanted to repurpose them)
What I then did was blew some cash to start making full squads.
I had about 35-40 models, around 25 of which were metal and easily reusable. So I wanted to get 2-4 characters and 20 marines out of that lot. So I bought a single box of Space Wolf Pack, and it looks like I'm going to be able to just about squeeze 20 dudes out of it, and have a TON of torsos/legs leftover so that the next time I buy a box, I'll probably get about 15 models instead of just 10.
Then I had 5 metal terminators, and again wanted to get 2 characters and a squad out of that lot, so I bought a box of wolf guard terminator, giving me 10 suits, 2 of which I plan to make into characters.
To pad that out with some awesome bitz and some extra special weapons/weapons, I bought a box of Sterngard Veterans. Which comes with a stupid amount of awesome things that I needed like bolters, combi weapons, extra shoulder pads, and a couple more legs/torsos I could choose from for characters as well as one of the most awesome power-fist sculpts I've ever seen.
On-top of that I bought a Razorback and some magnets, I magnetised it so it can be used as either a rhino or a razorback (I'm also going to magnetize all the characters I build, and some of the special weapon options for my grey hunters) and plan to buy a second one soon.
I also repurposed a couple of LOTR Wargs as Fenrisian Wolves.
The result (once I finish building and painting it all) is that I'll have a 750pt core army that's easily expandable into 1000 or even 1250pts without spending too much money (I have some other stuff sat aside such as Ragnar Blackmane and Logan Grimnar and some other metal specials like a Tech Marine and Servitors etc)
While it wasn't the cheapest way to go about it (Sterngard and Wolf Guard Terminators are almost £30 a box) what it does mean is that moving forward I've got a TON of 'bitz' and can easily add almost 2 full squads to my army with just one purchase of another wolf pack box using all the spare parts. And thanks to the magnets, it's all flexible and I'm not stuck with just one build.
The one thing I am stuck with though is the Rhino's over Drop Pods. Drop Pods seem more powerful for Space Wolves but I personally don't like them very much so I went Rhino's.
I'd advice basically following a similar thought process, work out what kind of space marines you want (assuming they are generic and not already a specific chapter) and then see what you need to fill the gaps in what you already have and go about trying to do that in a way that's either as cheap as possible, or gives you more flexibility to expand.